A non-parametric efficiency and productivity analysis of transition banking

This thesis examines banking efficiency and the productivity of thirteen transition Central and Eastern European banking systems during 1998-2003 using Data Envelopment Analysis (DEA). It proposes a non-parametric methodology for non-radial Russell output efficiency measure of banking firms, incorporating risk as an undesirable output. In addition, the proposed efficiency measure handles unrestricted data, i. e. both positive and negative. The Luenberger productivity index is suggested, which is applicable to technology where the desirable and undesirable outputs are jointly produced, and are possibly negative. Furthermore, the thesis addresses the main issue in the literature on banking performance measurement, which concerns the lack of consistency in the conceptual and theoretical considerations in describing the banking production process. Consequently, a metaanalysis tool, to examine the choice of inputs and outputs definitions in the banking efficiency literature, is suggested. In addition, the performance measures are estimated using three alternative definitions of the banking production process focusing on the risk and environmental dimensions of bank efficiency and productivity, with further comparative analysis using bootstrapping and kernel density techniques. Overall, the empirical results suggest that in Central and Eastern Europe Czech, Hungarian and Polish banks were the most technical efficient banks and the banking risk was mainly affected by external environmental factors during the analyzed period. Productivity analysis implies that the main driver of productivity change in the Central and Eastern European banks is the technological improvement. As meta-analysis revealed, the choice of particular approach of describing the banking production process is determined not by the availability of particular input or output variable information but the concepts of researcher's theoretical considerations. Statistical tests and density analysis indicate that efficiency scores, returns parameters and productivity indexes are sensitive to the choice of particular approaches

Returns to scale, spillovers and persistence: a network perspective of U.S. bank size

The methods for ray-scale economies (RSE) and expansion-path scale economies (EP SE) are extended to the dynamic spatial setting. We apply these methods to large U.S. banks using dynamic spatial cost and revenue models and key Öndings include the following. First, accounting for spillovers and dynamics strengthens the case for EP SE over RSE. Second, own, spillover and total EP SE are very persistent in future periods. Third, the EP SE suggest that an appropriate regulatory size cap would shift one systemically important bank to its contemporaneous optimal scale. However, the EP SE suggest that this would be a sub-optimal dynamic scale in future periods.</p

Returns to scale, spillovers and persistence: a network perspective of U.S. bank size

The methods for ray-scale economies (RSE) and expansion-path scale economies (EP SE) are extended to the dynamic spatial setting. We apply these methods to large U.S. banks using dynamic spatial cost and revenue models and key Öndings include the following. First, accounting for spillovers and dynamics strengthens the case for EP SE over RSE. Second, own, spillover and total EP SE are very persistent in future periods. Third, the EP SE suggest that an appropriate regulatory size cap would shift one systemically important bank to its contemporaneous optimal scale. However, the EP SE suggest that this would be a sub-optimal dynamic scale in future periods.</p